Analysts weigh in on Osisko Development’s Utah gold mine acquisition

Less than two weeks after revealing its intention to add a new gold project to its list of assets, Osisko Development (TSXV: ODV) is getting positive feedback from market analysts on the deal. On January 25, Canadian-based Osisko announced it had entered into definitive agreements with three private American companies to acquire 100% of their ownership in Tintic Consolidated Metals LLC, which has been operating the Trixie gold mine in central Utah.

The deal will cost Osisko aggregate payments totaling approximately US$177 million, including about US$54 million in cash and the issuance of 35 million common shares at a deemed price of $4.32 apiece for a value of about US$123 million. Tintic Consolidated is also entitled to a further US$12.5 million in cash or shares at Osisiko’s election over five years, a 2% NSR (with a 50% buyback for US$15 million in Osisiko’s favour) and the right to 10% of the net smelter proceeds from the processing of about 21,000 tonnes of tailings currently at the site.

The acquisition sees Osisko gain ownership of just under 6880 hectares in Utah’s historic Tintic mining district, including the fully permitted, high-grade Trixie underground mine, an adjacent mill, and mineral claims to the property, located 95 km south of Salt Lake City. Trixie resumed operations in 2021, and last year produced 14,709 oz gold at an average head grade of 59 grams gold per tonne. The mine has a current capacity of 45 tonnes per day.

In a research report, Haywood Capital Markets analyst Kerry Smith wrote that “the acquisition is not cheap, but the reward is potentially big.” In particular, he highlighted the importance of two new discoveries at Trixie, the T2 and T4 structures, and called the grades at these new structures “pretty spectacular.”

The ultra-high grade T2 structure is sub vertical, averaging 0.3 to 1.0 metres in true width. It was discovered in 2020, when geologists stepped back in a newly developed crosscut on the 625 level of the Trixie mine. This revealed grades that ranged from 2 oz gold per tonne to over 100 oz gold per tonne from more than 2,300 samples collected over a 215-metre strike length.